Critical Analysis of Reckitt Benckiser Corporate Governance Principles

4065 Words Aug 18th, 2012 17 Pages
Background

In 2001, newspaper publishing baron Robert Maxwell’s body was in the sea around Tenerife. The papers reported that apparently, he went overboard when cruising on his luxury yacht. BBC Home (Nov 1991)
It was subsequently revealed however that he had withdrawn millions of pound of the pension funds in his own company to stabilize his company, Mirror Group’s shares. This was all done without prior authorisation and it took the efforts of Shearson Lehman, Goldman Sachs and the British government to replenish the funds but only partly. Pensions World (Oct 2011).
Seven years later, it was the turn of one of the companies who helped clean up Maxwell’s mess. Lehman Brothers filed for bankruptcy and emergent details included
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• Identifying and ensuring that accounts are independently audited

Reckitt Benckiser and Corporate Governance
Apart from two major scandals which are covered later in this report they are generally compliant with corporate governance regulations and appear to be a responsibly run company which practices sustainable business practices in line with the various sections of the code as detailed below.

STATEMENT OF COMPLIANCE
The Combined Code
Reckitt Benckiser as a FTSE 100 listed company on the stock exchange is governed by highly regulated standards on corporate governance and reported that their management models are based on the June 2008 edition of the Combined Corporate Governance Code which was issued by the Financial Reporting Council (FRC).
As required by the ‘Comply or Explain’ portion of the code, Reckitt Benckiser affirmed that the code was complied with and explained their application of the principles spelt out in Section 1 of the code. However, areas where the ‘company’ did not comply with the code were explained in the report as required.
The ‘board’ further confirmed that the provisions of the code had been complied with by the company and they had applied the main principles of the code for business and management operations

The UK Corporate Governance Code
Reckitt Benckiser does not yet follow the UK Corporate Governance Code as they stated that it is not yet
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